Latest News

Mon 11th January 2010
Distributor must pay £125,000 damages for breach of contract

A distributor has been ordered to pay a manufacturing company £125,000 compensation after failing to promote its products in the way that had been agreed by contract.

The manufacturer made cladding panels for use in the construction industry. It entered into an agreement in 1999 with another company and its subsidiary which were given exclusive rights to distribute its products in the UK.

The agreement was to run for 20 years but in 2005 the manufacturer terminated the contract on the basis that the distributors had not used all reasonable endeavours to promote and sell the products in the agreed territory.

The distributors made a claim for compensation saying the early termination was in breach of contract and caused them to suffer losses. The manufacturer counter-claimed for damages on the basis that the distributors had not marketed its products properly.

The High Court held that, looked at overall, the evidence clearly showed that the distributors had failed to use all reasonable endeavours in marketing the products as required by the contract. Nor had they rectified this breach during the 30-day period allowed after the service of the default notice.

The manufacturer was therefore entitled to terminate the contract. It was also entitled to receive £125,000 compensation.

If you need more information about contract terms, please contact Garry Dannan or Lesley Milne on 01234 400000 or by email: gdannan@pwhmllp.com or lmilne@pwhmllp.com